=+13-16 K Single-rate versus dual-rate methods, support department OBJECTIVE 1 The Canterbury power plant services all manufacturing departments of Kakariki Engineering. The Canterbury plant’s budget for next year has been expressed in the following monthly terms:

Manufacturing department Needed at practical capacity production level (kilowatt-hours)

Average expected monthly usage

(kilowatt-hours)

Christchurch 10 000 8 000 Dunedin 20 000 9 000 Hokitika 12 000 7 000 Nelson 8 000 6 000 Total 50 000 30 000 The expected monthly costs for operating the power plant during the budget year are $15000: $6000 variable and $9000 fixed.

Required 1 Assume that a single cost pool is used for the power plant costs. What budgeted amounts will be allocated to each manufacturing department if:

(a) the rate is calculated based on practical capacity and costs are allocated based on practical capacity and

(b) the rate is calculated based on expected monthly usage and costs are allocated based on expected monthly usage?